Steve Sjuggerud's note: Today's DailyWealth is the third in our holiday series of issues written to help make you a better investor. For Dan Ferris' explanation of billionaire Warren Buffett's biggest secret, read on...

Warren Buffett is by far the world's most successful investor. Every $1,000 invested with him in 1965 has become over $200 million today. That's more than a 200,000 percent rise in value over a period of 37 years. By contrast, the S&P 500 is up just 4,742% during the same period.

How did he do it? What did he do that was so different from what everyone else does?

What Warren Buffett did was simple. It's too simple, in fact. That's why most people overlook it. It's why most people don't make a fortune in stocks. It's what you need to know if you're going to be successful in the stock market.

The one thing Warren Buffett does is that he controls the one and only thing any investor has control of in any investment transaction: the price he pays.

Buffett looks at a company, decides what its stock is worth, and refuses to pay more than a fair price. That's how he makes all his investments. When he bought 3 million shares of media moguls Capital Cities in the mid-1980s, he did a few calculations and told them he'd pay exactly $172.50 per share. The deal was done.

He bought over $1 billion in Coca-Cola shares because they were trading for less than $11, which he considered a bargain.

Even today, as he told his shareholders at a recent annual meeting, "We have no master plan... we don't sit around and talk about the future of industries. We have no reports or staff. We just review what comes in and look for companies with a durable competitive advantage at an attractive price."

Buffett is as clear in writing as he is in person: "The critical investment factor is determining the intrinsic value of a business and paying a fair or bargain price."

Did you catch that?

If imitating the investment results of the greatest investor in history is what you want to do, you don't even need to pay a bargain price. A fair price will get you there. You don't need to buy an endless string of bargains to get rich. That's very different than the way most people invest. They buy stocks without knowing what the business they're investing in is really worth.

They don't know what price they should pay, so they lose. They look at price charts and try to predict the stock's price one year away, or one month, or one week... sometimes even one hour! It's totally unnecessary... sitting there watching prices go up and down every day.

Buffett says he wouldn't care if the stock market closed for ten years. He doesn't watch the market's up and down movements from day to day. And he never loses sleep as an investor. As long as he's paid a fair or bargain price, and as long as the business he's invested in hasn't changed significantly, there's no need to worry about the future.

Not only is this the most profitable path investors can take... but paying the right price is the one thing you can do as an investor that will give you unshakeable peace of mind.

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